Getting to the top table

A fascinating session from Linda Kennedy at the CIPD conference, on influencing the board. It was aimed at HR professionals, who are forever moaning about not being given a seat at the top table, but the advice could apply to executives in any business function. For governance reasons, CFOs usually end up on the board and exec team but anyone else has to earn their place. Non-revenue earning functions like IT and HR might see themselves as peers of Finance but they have to fight a lot harder for those coveted exec team seats.

So what did Linda, who is HR Director at Yell and formerly HRD at Orange and Serco, advise?

A lot of it was what I call uncommon sense – that is, sensible but not very common.

Her top tips were:

  • Be commercial – know how to read a balance sheet and understand financial concepts and measures like ROI. You don’t need to do the CFO’s job but you at least need to learn his language.
  • Understand your business – not just your own organisation but the broader business environment – its markets, competitors and technological developments.
  • Be able to apply your own functional knowledge in the business context. Linda gave a quote from a former CEO – he wanted an HR Director who could see round corners – who knew which way the business and labour market were going and could bring the two together.
  • Understand and use data. Be able to back up your arguments with solid information. If you want your exec team to invest in something, you need to explain the benefits of doing something or the costs of not doing it.
  • Build relationships. At executive team level, you spend a lot more time building relationships than delivering. Many people find this uncomfortable, especially after spending entire careers justifying their existence by delivering stuff. But, as Linda said, most board decisions are made long before the board meeting. Influencing  peers outside the room is a key part of a directors’ role.
  • Read outside your own specialism. Break out of your functional ghetto and read business journals from other publications. Understand the world of the Finance and Marketing Directors and it will be easier to influence them.

The theme underpinning all this is the transition from functional expert to business leader. From what I’ve seen, the difference between HR professionals who make it onto the exec team and those who don’t is the way they think about their role. Many heads of HR (and of other functions) come to the table as representatives of their departments. They see themselves as professional advisers to the business. They wait for the CEO and exec team to define the business strategy then they develop the HR strategy on the back of it.

That’s fine as far as it goes but when did you last hear a Finance Director say “The Finance strategy should be aligned to the business strategy”? They just take it as read!

Those HR professionals who become exec team members think of themselves as co-managers of the firm. They come to the table as business leaders who happen to have expertise in HR, rather than HR experts advising the business. It is a subtle but crucial difference.

I’ll give you an example. An HR director I know came up with the idea of acquiring a firm which would complement the organisation’s current skills and enable it to move into a new market, then put the idea to the rest of the exec team. That was a business strategic decision informed by HR expertise and knowledge of the company’s skill base. That is very different from waiting for the exec to set the strategy and then explaining the ‘people’ implications. It’s what I call the difference between ‘HR strategy’ and ‘strategic HR’.

It is this mind-set that the HR professionals like Linda Kennedy who make it to board level have. They don’t lose sight of the HR expertise on which they built their careers but they are business people first – business leaders who have HR backgrounds rather than HR people who advise the business.

And, if you replace HR with IT, PR or any other specialist function, the same applies.

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6 Responses to Getting to the top table

  1. David Goddin says:

    Well said! I’d go further and not constrain this dynamic to any specialist function. Functions such as sales, product, operations get to the board in part because of governance and efficient decision making, and also because those business heads make the business happen both day to day and strategically. If you’re not making the business happen then you’ve no place at the table…

  2. Pingback: Getting to the top table - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  3. Great post Rick, at least tlll the ‘business person first’ part: yes, your HR Director story provides a great example of strategic HR, but this was because they understood people, their capabilities and how these could be enhanced not just because he/she could read a balance sheet and understand financial concepts.

    To me, strategic HR isn’t about being an HR person who advise the business or a business leader who has an HR background, it’s being an HR leader of the business. I think it’s different.

  4. “For governance reasons, CFOs usually end up on the board and exec team”. That’s certainly the standard justification, but it doesn’t hold up to scrutiny. Actual governance (i.e. mandated by law or company regs) is usually handled in separate forums, such as audit and remuneration committees.

    The dominance of finance in board composition evolved out of the gradual decline in activist shareholders and the growth in mutual funds, which required an “honest broker” on the inside. The chief role of many CFOs is now investor relations. This development was reinforced by the bias towards financial metrics in performance management, which led to the primacy of “shareholder value”. Starting in the 80s, the pressure for private companies to go public, and for existing public firms to acquire others, also boosted the power of the CFO (and his/her influence on strategy), and incidentally often promoted the head of legal to the board.

    The persistent short-termism of much of British business owes a lot to the dominant role that finance has carved out for itself in company management. What the FD actually says is: “The business strategy should be aligned with the finance strategy”. An example of this is the growing fashion for spending spare cash on share buybacks, to prop up the share price, rather than on capital investment.

    Kennedy’s prescription reinforces the conventional priority given to financial literacy, despite the fact that few businesses need to examine their balance sheet more than once a year, whereas operational data (which CFOs have little understanding of) needs to be quizzed regularly. The bottom line is that there is no one-size-fits-all approach, as it entirely depends on the nature and dynamics of the business. This is why family-owned firms have superfluous family members on the board and why co-ops have worker reps; and why high-tech firms tend to have techies on the board, while sales firms tend to have sales & marketing.

    HR directors who think they should be on the board simply because of the role they have are guilty of the same delusion that finance directors suffer from. All businesses deal in money and all businesses deal in people, but that doesn’t make either necessarily central to the steering of the firm, any more than stationery or office space.

  5. Pingback: The focus of HR isn’t to be commercial: Day three of #cipd2012 « change-effect

  6. Rick, interesting blog. Here’s a link you might like for a CMI blog that refers to a KPMG report highlighting how few executives feel that HR does a good job demonstrating their value to the business: http://www.managers.org.uk/practical-support/management-community/blogs/hr-fit-purpose

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